Court File and Parties

COURT FILE NO.: CV-16-093 DATE: 2018-11-26

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

ENVIRONMENTAL BUILDING SOLUTIONS CORPORATION Plaintiff

Counsel for Plaintiff: Terrence Pochmurski

- and -

2420124 ONTARIO LIMITED, 2420125 ONTARIO LIMITED, and THE CORPORATION OF THE MUNICIPALITY OF GREY HIGHLANDS Defendants

Counsel for Defendants 240124 Ontario Limited and 240125 Ontario Limited: David M. Pomer and Arvid Shahmiry

HEARD: April 12, 2018, at Owen Sound, Ontario

BEFORE: Price J.

Costs Endorsement

OVERVIEW

[1] The plaintiff, Environmental Building Solutions Corporations, (“Environmental”), began a construction lien action for its initially estimated fees for mould remediation, which the defendants paid, and for additional amounts it invoiced for work done in the final year and a half of the contract, from July 24, 2014 to December 9, 2015, which the defendants disputed and did not pay. The defendants argued that the mould removed during that period had emerged from spores that the plaintiff should have eliminated pursuant to the contract, for the amount initially estimated.

[2] On October 18, 2017, the lien was vacated by Conlan J. on the ground that it was registered beyond the statutory period following completion of the contract. Justice Conlan gave the plaintiff 60 days to move to amend its Claim. Environmental made a motion to amend on December 17, 2017, within the 60 day period.

[3] Environmental sought leave to amend its Statement of Claim to assert that the work it performed in the final year and a half was done pursuant to an oral contract. The defendants opposed the motion on the ground that the statutory 2-year limitation period had expired before the proposed Amended Statement of Claim was served.

[4] For reasons released on May 24, 2018, this Court found that the Amended Statement of Claim clarified and broadened the legal basis of the claim advanced in the Statement of Claim, based on the same facts, but did not assert a new cause of action. The Court held that the limitation period began to run, at the earliest, on January 21, 2016, 30 days after Environmental issued its final invoice to 242 on December 21, 2015, for the supply of a gas water pump and dehumidifier supplied on December 9, 2015, and expired two years later, on January 21, 2018. The Court found that Environmental had served its motion for leave to amend December 7, 2017, within the limitation period and within the 60 day period permitted by Conlan J.’s Order of October 18, 2017. It served a Supplementary Motion Record on March 14, 2018, which it obtained leave to file, and which contained a revised Amended Statement of Claim, which the Court held that the Rules permitted and Conlan J.’s endorsement did not prohibit.

[5] The court exercised its discretion under Rule 59.01 to make an order retroactively (“nunc pro tunc”), to the date when the motion for leave to amend was served, or to the date when the Supplementary Motion Record was served, granting Environmental leave to file the revised Amended Statement of Claim.

[6] The parties were unable to agree on costs, and submitted written costs submissions. The Court has reviewed their submissions, and this endorsement will address that remaining issue.

POSITIONS OF THE PARTIES

[7] Environmental claims its costs, on a partial indemnity scale, in the amount of $14,415.96, based on 38 hours spent @ $308.75 per hour. It relies on its presumptive entitlement to costs based on its success in the motion.

[8] The defendants claim their costs in the amount of $5,000.00 and, in the alternative, request that no costs be ordered paid by either party as they submit that it the plaintiff was no more successful than the defendants.

ANALYSIS AND LAW

a) General principles

[9] Justice Boswell set out the general principles governing costs assessments in George v. Landles, 2012 ONSC 6608 at paras. 4-6, where he stated:

The award of costs is governed by section 131 of the Courts of Justice Act, R.S.O. 1990 c. C.43 and by Rule 57.01 of the Rules of Civil Procedure. Section 131 provides for the general discretion to fix costs. Rule 57.01 provides a measure of guidance in the exercise of that discretion by enumerating certain factors that the court may consider when assessing costs. In addition, the Court must always be mindful of the purposes that costs orders serve. As Perell J. summarized in 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (S.C.J.), at para. 10:

Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements (internal citations omitted).

Ultimately, in fixing an amount for costs, the overriding principles are fairness and reasonableness: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.); and Moon v. Sher (2004), 246 D.L.R. (4th) 440 (C.A.). In assessing what is fair and reasonable in the circumstances, the Court is not to engage in a mechanical exercise, but rather must take a contextual approach, applying the principles and factors discussed above, to settle on a figure that is fair and reasonable in all the circumstances: Gratton-Masuy Environmental Technologies Inc. (c.o.b. Ecoflow Ontario) v. Building Materials Evaluation Commission, [2003] O.J. No. 1658, at para. 17. [1]

[10] The Court is guided by the factors set out in Rule 57.01(1) of the Rules of Civil Procedure. The Court may consider, among other factors, the following:

(a) The complexity of the proceeding;

(b) The importance of the issues;

(c) The conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(d) Any offers to settle;

(e) The principle of indemnity;

(f) The concept of proportionality, which includes at least two factors:

(i) The amount claimed and the amount recovered in the proceeding; and,

(ii) The amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(g) Any other matter relevant to the question of costs.

b) Importance and complexity of the motion

[11] The motion was of importance to the parties because its outcome determined whether or not Environmental would be able to proceed with its reconstituted action.

[12] The motion was moderately complex. It raised procedural issues as to when a claim will be statute-barred, the right to amend a Claim, and the right to file supplementary material on a motion for leave to amend. The amendment should have been consented to, having regard to the leave Conlan J. granted to bring the motion, and the fact that the plaintiff brought the motion within the period Conlan J. had stipulated, and for relief to which it was entitled pursuant to the Rules.

c) Reasonableness and offers to settle

[13] The general rule in a determination of entitlement to costs is that costs follow the event, and will be awarded on a partial indemnity scale. [2] In special circumstances, costs may be awarded on a higher scale, but those cases are exceptional and generally involve circumstances where one party to the litigation has behaved in an unreasonable manner, and/or unnecessarily run up the costs of the litigation. [3] I do not find that Environmental engaged in conduct that should disentitle it to costs, or that the defendants engaged in conduct that attract costs on a higher scale.

[14] Neither of the parties tendered any offers to settle that would affect the determination of costs.

d) Indemnity - The hourly rates charged

[15] In determining the appropriate hourly rates to be assigned to the lawyers involved in the motion, the court follows the approach taken by Aitkin J. in Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041. [4] That is, the starting point is the successor of the Costs Grid, namely, the “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (the “Costs Bulletin”), which can be found immediately before Rule 57 in the Carthy or Watson & McGowan editions of the Rules, and sets out maximum partial indemnity hourly rates for counsel of various levels of experience.

[16] The Costs Bulletin suggests maximum hourly rates (on a partial indemnity scale) of $300.00 for lawyers of between 10 and 20 years’ experience. [5] The upper limits in the Costs Bulletin are generally intended for the most complex and important of cases. Environmental’s lawyer, Terrence Pochmurski, was called to the Bar in Ontario in 1998, and had practiced law for 20 years at the time of the hearing. As such, he was at the upper end of the range of lawyers with 10 to 20 years of experience.

[17] In 2005, Mr. Pochmuski would have been entitled to claim a maximum partial indemnity rate of $300.00 per hour. The Costs Bulletin, published in 2005, is now dated. Aitkin J. considered adjusting the Costs Subcommittee’s hourly rates for inflation, as Smith J. did in First Capital (Canholdings) Corp. v. North American Property Group, 2012 ONSC 1359, [6] but the unadjusted rates of the lawyers in her case were only slightly less than the actual fees they charged, so she elected to use their unadjusted rates. Normally, however, it is appropriate to adjust the hourly rates in the Costs Bulletin to account for inflation since 2005.

[18] The court is guided by the rates in the Costs Bulletin, not the actual hourly rates charged. The actual rates charged are relevant only as a limiting factor, in preventing the costs awarded from exceeding the actual fees charged. The Costs Subcommittee’s rates apply to all lawyers and all cases, so everyone of the same level of experience starts at the same rate.

[19] The court adjusts the hourly rate, or the resulting fees, to reflect unique features of the case, including the complexity of the proceeding, the importance of the issues, and the other factors set out in Rule 57.01(1). If an excessive amount of time was spent, or too many lawyers worked on the file, the court reduces the resulting amount of fees accordingly. As long as the resulting amount does not exceed the amount actually charged to the client, the actual fee that the client agreed to pay is irrelevant. If it exceeds the amount actually charged, the amount awarded should be reduced to reflect the fact that the primary purpose of a costs award is indemnification. [7] Mr. Pochmurski’s actual rate was $475.00 per hour.

[20] Based on the Bank of Canada Inflation Calculator, available online, [8] the 2018 equivalent of the $300.00 hourly rate in the Costs Bulletin for lawyers of between 10 and 20 years’ experience is $372.85. Mr. Pochmurski claims a partial indemnity rate of $308.75, which is 17% less than the maximum he is entitled to claim. I find that the hourly rate he is claiming is reasonable.

e) Indemnity - The time spent on the motion

[21] Mr. Pochmurski spent 38 hours in the preparation for, and attendance on, the motion. The defendants did not submit a Costs Outline setting out the time their lawyer spent on the motion, which would permit me to compare the time spent by each party’s lawyers, to help determine whether the amount of time spent by Mr. Pochmurski was reasonable.

[22] Based on my observations of the oral argument and written material filed, I find the time spent by Mr. Pochmurski was reasonable.

f) Proportionality and the reasonable expectation of the unsuccessful parties

[23] The total costs of $14,415.96 that Environmental claims, on a partial indemnity scale, represents 11% of the $130,000.00 damages that it claims in the action. On that basis, I find that the costs claimed are proportional to the amount that was at stake in the motion, and within the range that the defendants should have expected to pay if unsuccessful on the motion.

g) Other matters relevant to the determination of costs: Disbursements

[24] In fixing costs, the court need not undertake a line by line analysis of the hours or expenses claimed, nor should it second guess the amounts claimed unless they are clearly excessive or overreaching. [9] The defendants have not asserted that the amount of $1,158.23 that Environmental claims for disbursements is unreasonable and accordingly, I do not propose to reduce the amounts claimed. They consist, in large part, of standard expenses, including $138.52 for courier, $248.98 for the transcript of cross-examinations, $205.00 for agents’ accounts, and $160.00 for the court filing fee. Disbursements will be allowed in the amount of $1,043.39 plus HST of $114.84.

CONCLUSION AND ORDER

[25] For the foregoing reasons, it is ordered that:

1. 2420124 Ontario Limited and 2420125 Ontario Limited shall forthwith pay to Environmental Building Solutions Corporation its costs of the motion in the amount of $14,415.96, consisting of the following: a) Fees: $11,732.50 b) HST: $ 1,525.23 c) Disbursements: $ 1,043.39 d) HST: $ 114.84 TOTAL: $14,415.96

2. 2420124 Ontario Limited and 2420125 Ontario Limited shall pay post-judgment interest at 3% on the costs amount payable, from the date of this Order.

Price J. Released: November 26, 2018

Footnotes

[1] George v. Landles, 2012 ONSC 6608 at paras. 4-6. [2] Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.). [3] Standard Life Assurance Company v. Elliott (2007), 86 O.R. (3d) 221 (S.C.). [4] Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041 at paras. 7 and 11-16. [5] “Information for the Profession” bulletin (“the Costs Bulletin”) from the Costs Sub-Committee of the Rules Committee (that the Costs Sub-Committee of the Rules Committee issued to replace the Costs Grid, which it repealed in 2005). The Costs Bulletin has advisory status only and not statutory authority, as it was not included in the Regulation that repealed the Costs Grid. [6] First Capital (Canholdings) Corp. v. North American Property Group, 2012 ONSC 1359. [7] The principle that costs should not exceed the amount charged was articulated by Corbett J. in Mantella v. Mantella, (2006), 27 R.F.L. (6th) 76 (S.C.J.), subsequently approved by Aitken J., sitting as a Divisional Court judge in Geographic Resources. [8] Available online at http://www.bankofcanada.ca/rates/related/inflation-calculator. [9] Fazio v. Cusumano, [2005] O.J. No. 4021 at para. 8 (S.C.).